What factors affect rental rates.. continued
The past three weeks we have been talking about factors that affect rental rates. Up to this point, supply and demand, the value of the cash crop and the quality of the soil have proven to be players in this dilemma. Today we will talk about how air and water management contribute to rental rates. For many who are renting land from a landlord for the first time, soil types or the quality of the soil will most likely drive the value because of not having a history of the farm. As time goes by and you gain some experience, you can start to adjust the rates based on other factors, air and water being two of them.
Determining the land value can be easy if you know that there is a recent system of pattern tile that was laid in the field. For many years in the Midwest, tile has been an important management tool to help control the water table. Most of the time a grower will see a payoff in 2-3 years. But what if this system is not there or you don’t know what the tile situation looks like? The first thing to do is sit down with the landowner and get a history of the field. How has it performed? Where are the problem areas and what weather conditions create them?
The next step would be to look at the most recent soil test if you have them, and have some pulled if not. You may be thinking, “I am just going to put a base rate of P&K on this new ground anyway, why pull soil samples?” Because it is not about P&K. Historically the most limiting factor in US agriculture has not been the amount of phosphorus and potassium in the soil, it has been issues related to air and water management. A study by Mittler in 2006 shows that between 1980 and 2004, the top two causes of crop loss in excess of $1B or more was heat or droughts stress and waterlogging and flooding. The importance of the soil test is not about P&K, it is about calcium and magnesium. The balance of calcium and magnesium have a direct impact on how water moves through your soils. The higher the calcium, the more mellow the soils are and the more movement through the profile. The higher the magnesium, the tighter the soil, so magnesium tends to hold water to it, reducing the flow to the existing tile.
As a producer, I made the comment in last week’s blog that if you can take marginal ground and improve it, you have a great opportunity. The single most effective way to do this is to improve the air and water exchange in the soils. You can take a landlord’s ground that was once mediocre and make it very productive by establishing a water table with tile if here is not a system there and then balancing the soil chemistry to improve flow. I would say most landowners are not aware that their soils can be improved in this way. It is a great opportunity for you the grower to bring leadership to them as well as in time improving the value of their land. As a grower, this can become a double-edged sword. You may be working toward eventually paying the landlord more in cash rent as the soils improve, but the reward on the production side will greatly pay incrementally on these improvements.
As a farmer, you have a history of improving the soil and making it more productive.
Have you ever had the opportunity to share that story with landowners you would like to work with? I am sure many have not but would like to. But how? Here at Bird Dog we want to tell your story. What tools have you used to improve your ground and what benefits will you bring to the landowner? For many landowners, the land they own may not be first thing they think about in life each day. They have other responsibilities and priorities to focus on, but for you farming takes up a great deal of thought. It is your life. Landowners aren’t going to think about you unless you give them a reason to do so. We can help give them something to think about – YOU.